This preview shows page 1. Sign up to view the full content.
Unformatted text preview: The downstream ﬁrm needs one unit of input to produce one unit of output. It buys the input from the upstream ﬁrm. The marginal cost of producing the input is constant, c = 20 . i. if both ﬁrms are monopolists, ﬁnd the proﬁt maximising input and output prices as well as the proﬁt of the upstream and downstream ﬁrms ii. What would be the proﬁt if the input and output were produced by one ﬁrm. Is there an incentive for vertical integration? 1...
View Full Document
This note was uploaded on 02/16/2010 for the course ECOS Economics taught by Professor None during the One '09 term at University of Sydney.
- One '09